That Time Trump Wriggled His Way out of Bankruptcy and Called It a 'Blip'
The following is an excerpt from the new book Trump and Me by Mark Singer (Tim Duggan Books, 2016):
During Trump’s ascendancy, in the 1980s, the essence of his performance art—an opera-buffa parody of wealth—accounted for his populist appeal as well as for the opprobrium of those who regard with distaste the spectacle of an unbridled id. Delineating his commercial aesthetic, he once told an interviewer, “I have glitzy casinos because people expect it. ... Glitz works in Atlantic City. ... And in my residential buildings I sometimes use flash, which is a level below glitz.” His first monument to himself, Trump Tower, on Fifth Avenue at 56th Street, which opened its doors in 1984, possessed many genuinely impressive elements—a 68-story sawtoothed silhouette, a salmon-colored Italian-marble atrium equipped with an 80-foot waterfall—and became an instant tourist attraction. In Atlantic City, the idea was to slather on as much ornamentation as possible, the goal being (a) to titillate with the fantasy that a Trump-like life was a lifelike life and (b) to distract from the fact that he’d lured you inside to pick your pocket.
At times, neither glitz nor flash could disguise financial reality. A story in the Times contained a reference to his past “brush with bankruptcy,” and Trump, though gratified that the Times gave him play on the front page, took umbrage at that phrase. He “never went bankrupt,” he wrote in a letter to the editor, nor did he “ever, at any time, come close.” Having triumphed over adversity, Trump assumes the prerogative to write history.
In fact, by 1990, he was not only at risk, he was, by any rational standard, hugely in the red. Excessively friendly bankers infected with the promiscuous optimism that made the ’80s so memorable and so forgettable had financed Trump’s acquisitive impulses to the tune of $3.75 billion. The personally guaranteed portion—almost $1 billion—represented the value of Trump’s good will, putative creditworthiness, and capacity for shame. A debt restructuring began in the spring of 1990 and continued for several years. In the process, 600 million or 700 million or perhaps 800 million of his creditors’ dollars vaporized and drifted wherever lost money goes. In America, there is no such thing as a debtors’ prison, nor is there a tidy moral to this story.
Several of Trump’s trophies—the Plaza Hotel and all three Atlantic City casinos—were subjected to “prepackaged bankruptcy,” an efficiency maneuver that is less costly than the full-blown thing. Because the New Jersey Casino Control Act requires “financial stability” for a gaming license, it seems hard to avoid the inference that Trump’s Atlantic City holdings were in serious jeopardy. Nevertheless, “blip” is the alternative “b” word he prefers, as in, “So the market, as you know, turns lousy and I have this blip.” Trump began plotting his comeback before the rest of the world—or, perhaps, even he—fully grasped the direness of his situation. In April of 1990, he announced to the Wall Street Journal a plan to sell certain assets and become the “king of cash,” a stratagem that would supposedly set the stage for a shrewd campaign of bargain hunting. That same month, he drew down the final $25 million of an unsecured $100 million personal line of credit from Bankers Trust. Within seven weeks, he failed to deliver a $43 million payment due to bondholders of the Trump Castle Casino, and he also missed a $30 million interest payment to one of the estimated 150 banks that were concerned about his well-being. An army of bankruptcy lawyers began camping out in various boardrooms.
Making the blip go away entailed, among other sacrifices, forfeiting management control of the Plaza and handing over the titles to the Trump Shuttle (the old Eastern Airlines Boston–New York–Washington route) and a twin-towered 32-story condominium building near West Palm Beach, Florida. He also said good-bye to his 282-foot yacht, the Trump Princess, and to his Boeing 727. Appraisers inventoried the contents of his Trump Tower homestead. Liens were attached to just about everything but his Brioni suits. Perhaps the ultimate indignity was having to agree to a personal spending cap of $450,000 a month.
Adapted from TRUMP AND ME Copyright © 2016 by Mark Singer. Published by Crown Publishers, an imprint of Penguin Random House LLC.